BNUMBER:  B-271829
DATE:  July 26, 1996
TITLE:  A. Hirsh, Inc.

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Matter of:A. Hirsh, Inc.

File:     B-271829

Date:July 26, 1996

Michael S. Lubline, Esq., for the protester.
C. Joseph Carroll, Esq., Department of Justice, for the agency.
John L. Formica, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency properly withdrew the small business set-aside of two contract 
line items (CLIN) set forth in an invitation for bids for horsetail 
and tampico fiber where the lowest bid for these CLINs submitted by an 
eligible small business exceeded the bid of an ineligible bidder by 
34.5 and 48.8 percent.  

DECISION

A. Hirsh, Inc. protests the withdrawal of the small business set-aside 
applicable to  contract line item (CLIN) Nos. 0002 and 0004 in 
invitation for bids (IFB) No. 1PI-B-1607-95, issued by Federal Prison 
Industries, Department of Justice, for horsetail and tampico fiber for 
use in the manufacture of paint brushes and push brooms.  Hirsh, a 
small business concern, contends that the agency improperly determined 
that the prices submitted by Hirsh for these CLINs were unreasonably 
high.

We deny the protest.

The IFB provided for the award of firm, fixed-price requirements 
contracts to the bidder or bidders submitting the low, responsive, 
responsible bids for each of the IFB's six CLINs.  CLINs 0002, 0004, 
0005, and 0006 were set aside for small businesses, while CLINs 0001 
and 0003, which were for the identical products and estimated 
quantities as CLINs 0002 and 0004, respectively, were unrestricted.

The agency received four bids in response to the IFB.   Hirsh bid a 
price of $5.03 per pound for CLINs 0001 and 0002, $3.60 per pound for 
CLINs 0003 and 0004, and $1.54 per pound for CLINs 0005 and 0006.  MFC 
bid a price of $3.74 per pound for CLINs 0001 and 0002, $2.42 per 
pound for CLINs 0003 and 0004, and $1.69 per pound for CLINs 0005 and 
0006.  One of the other bidders submitted prices for only CLINs 0005 
and 0006, and the other bidder, whose bid was determined 
nonresponsive, submitted prices for only CLINs 0001 through 0004. 
 
The agency awarded a contract for Hirsh for CLINs 0005 and 0006 as the 
low responsive, responsible bidder.  With regard to CLINs 0002 and 
0004, the agency determined that because Hirsh's bids for these CLINs 
were 34.5 percent and 48.8 percent higher, respectively, than the 
prices bid by MFC, Hirsh's bids exceeded the fair market price for the 
items and therefore could not be accepted.  The contracting officer 
thus sought and received the approval of the agency's Small and 
Disadvantaged Business Utilization Specialist to withdraw the small 
business set-aside for CLINs 0002 and 0004 on the basis that Hirsh's 
bids for these CLINs exceeded the fair market price for the items.

Hirsh protests the agency's determination that its prices for CLINs 
0002 and 0004 exceeded the fair market prices for these items, and the 
resultant withdrawal of the small business set aside for CLINs 0002 
and 0004.  Specifically, Hirsh argues that the agency's reference, in 
making this determination, to the prices submitted by MFC--which is 
not a small business--was inappropriate and did not provide a 
sufficient basis upon which to find that Hirsh's prices were 
unreasonably high.

Under FAR  sec.  19.506(a), a contracting officer may withdraw a set-aside 
before award based upon a determination that award to a small business 
concern would be detrimental to the public interest, because, for 
example, the award would be made at more than fair market price.  The 
contracting officer has discretion to determine price reasonableness 
in a small business or other set-aside, and we will not disturb such a 
determination unless it is unreasonable.  White Storage and Retrieval 
Sys., Inc., B-250133, Jan. 12, 1993, 93-1 CPD  para.  34.  In making a 
determination of price reasonableness, the contracting officer may 
consider pricing history, government estimates, current market 
conditions, or other relevant factors revealed by the bidding, 
including prices submitted by an otherwise ineligible large business.  
General Metals, Inc., B-248446.3, Oct. 20, 1992, 92-2 CPD  para.  256.

The agency's reliance on MFC's ineligible bids for CLINs 0002 and 0004 
as a benchmark for price reasonableness was, in our view, reasonable.  
As stated, MFC's prices for CLINs 0002 and 0004 (the set-aside CLINs) 
were identical to its prices for the unrestricted CLINs for the same 
items with the same estimated quantities.  Further, MFC's prices were 
comparable to the independent government estimate for the items, and 
similar to, although somewhat higher than, the prices bid by MFC in 
response to previous IFB's.  In sum, there is nothing in the record to 
suggest that MFC's bids for CLINs 0002 and 0004 were artificially low 
or were otherwise not submitted in good faith, or could not be relied 
upon as evidence of the fair market price.  Given that Hirsh's prices 
for CLINs 0002 and 0004 exceeded MFC's prices by 34.5 and 48.8 
percent, respectively, the agency, with the concurrence of the SBA 
representative, could reasonably determine that Hirsh's prices for 
CLINs 0002 and 0004 were in excess of the fair market price.  General 
Metals, Inc., supra (agency properly found small business prices 
unreasonable where they exceeded the prices submitted by an ineligible 
large foreign bidder by 14 percent).  Consequently, the resultant 
withdrawal of the small business set-aside for these CLINs was 
reasonable.  

The protest is denied.

Comptroller General
of the United States